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Why Uber and Lyft Were on the Brink of Shutting Down in California — and What Happens Next

L.A. residents and other Californians followed the real-time plot twists Thursday of the status of the two major ride-sharing services — Uber and Lyft — which had threatened to suspend service in the state.

The issue: Uber and Lyft were set to be subject to a recently-enacted California labor law, Assembly Bill 5 (aka AB5), which requires “gig economy” companies to reclassify workers as actual employees (instead of contractors). The intent of AB5, which went into effect Jan. 1, was to provide protections for gig workers, so they would be eligible to receive legally mandated employer benefits like a minimum wage, overtime pay, paid leave and health care coverage.

For many in the entertainment industry, ride-sharing services have become a primary way to navigate L.A. and its environs — and now represent an even more critical resource during the coronavirus pandemic. And both before and after COVID virtually brought Hollywood productions to a standstill, some industry workers worked as Uber or Lyft drivers to make ends meet.

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